1/20/11 Midnight Report: When All Else Fails, Just Buy The Dip

The market was down strong in the morning as both fears of rising inflation in China and common sense seemed to hurt sentiment, but then like a phoenix rising from the ashes (though luckily not River Phoenix rising from his ashes, because that would have been weird) investors stopped adjusting their bollinger bands, refused to overlay any more pivot points (and Money McBags would love to over lay any of these pivot points), threw away their Ouija boards, and remembered that the key to making money in this market is to simply buy the fucking dip. It is a more fool proof strategy than settling disputes using a two-headed coin or solving a rubik’s cube by merely peeling off the stickers and putting them back on, as the “Bernanke Put” lifts all falling markets (except for maybe Tunisia‘s).

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As for data today, new claims for unemployment dropped by 37k to 404k which was below analyst guesses of 420k (and no surprise the guess of 420 was too high, and strangely left analysts hungry). The most surprising thing of all though was that last week’s claims were revised down for the first time since full bush was still in style as they dropped from 445k to 441k, and no that is not a typo. Money McBags hasn’t been this surprised by anything since he learned that Paul Krugman won the Nobel Prize in Economics or Maria Vagina is a real person. As loyal readers know, the B(L)S has consistently employed the “hold the shock and hope for no awe” strategy of announcing better numbers and then revising them worse the next week with hopes that investors’ memories will be shorter than He Ping Ping‘s taint, and it has worked marvelously so far, so Money McBags can only scratch his head at this sudden reversal of strategy as it has made him more confused than Joe Lieberman (though without that old man smell).

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In other macro news, existing home sales were up 12.3% to “are you fucking kidding me?” Sales reached an annual run rate of 5.28MM units which destroyed analyst guesses of 4.85MM as a 1% drop in home prices, a jump in mortgage rates, and a buy one foreclosure get one free deal swept the market. That said, it is hard to, well, get hard about these numbers (unless you are reading them while Ali Sonoma gently whispers sweet nothings in to your ear) as sales are still 3% below last year’s number and 36% of sales were from distressed homes which include foreclosures, short sales, and wherever Charlie Sheen is sleeping.

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Finally, the Philly Fed index dropped to 19.3 from a downwardly revised 20.8 and those numbers mean less to Money McBags than brevity means to Tolstoy (though Money McBags does love him some War and Peace) or “no” means to Ben Roethlisberger. If anything, Money McBags is surprised the Philly Fed doesn’t always register as a negative since the only thing the city knows how to produce is crime, broken dreams, and heart attacks. Oh yeah, the Conference Board also came out with their index of leading indicators which rose 1% and brought the index to a record high thus securing its place in the annals (and anals) of economic forecasting as the least valuable index yet (just nudging out Art Laffer’s random number generator and GDP).

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Internationally, China’s economy expanded 10.3% in 2010 thanks to lending being looser than Arizona’s gun control laws or Alexander Hamilton’s interpretation of the Constitution, a shitload of state run infrastructure investments, and overwhelming demand for pee pee flavored coke (and loyal readers, Money McBags is terribly sorry for using that joke again, but you see, he has made the same reference now for the past bazillion China stories and is experiencing a bit of joke OCD). The big concern is that inflation continues to be high as the rate was 4.6% in December and many economists expect that pace to pick up again soon due to rising wages and seasonal factors like the Lunar New Year holiday in February and the release of Yoko Matsugane‘s new calendar.

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In the market, MS was up 5% as their profit jumped 60% to “lobster tails and blow jobs for all.” That said, the company either beat or missed analyst guesses of $.35 eps depending what you want to count as one-timers, gains from sales, and straight up manipulation. The driver of MS’ performance was their strong retail brokerage fees as clients came back in to the market to buy the fucking dip and that offset shitacular results from MS’ fixed-income division. And in the fourth most closely watched number (after 36, 24, and 34), MS’ compensation expense was 51% which dwarfed GS’ sub 40% ratio and ensured that no one at Morgan Stanley will ever have to lower themselves to slumming in a 5 series again.

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In other earnings news, EBAY was up after they beat earnings guesses on sales of $2.5B which is a fuckload of Johnny Dickshot autographs. To be honest, the most surprising thing to Money McBags was that EBAY is even still relevant since the last time he used them was to a buy a new stylus for his fucking Palm Pilot. That said, Paypal revenue (and yes, Paypal sounds like a NAMBLA dating site) was up 22% and is now 39% of EBAY’s revenue as mobile devices have made e-commerce more ubiquitous than bad grammar or Paris Hilton’s vagina. More importantly, EBAY gave above the Street guidance for 2011 as analysts were outbid on their guesses after EBAY waited until the last second to make guidance public.

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Elsewhere, F5 Networks was down ~20% after posting weaker than guessed results, having a book-to-bill ratio below 1, and closing fewer big deals than a member of BBW Personals Plus with a book of McDonald’s coupons and a year’s supply of Crisco. You all know Money McBags is a big proponent of cloud computing because there is no reason for any business to have an IT department, so look to buy into weakness in the sector. And finally. Arby’s is for sale with the bidding starting at “go fuck yourself” because why anyone would want to buy a shitty fast food restaurant with an outdated concept is more puzzling to Money McBags than why someone would build a cathedral from trash (or from anything) or want to watch this.

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In small cap News ISLE was down ~12% after pricing an offering of 5.3MM shares at $10.25 and as you all know Money McBags has called this company out as a short many times (though he did tell you to take some of your profits off the table after their last Q). As he said, they are simply burning too much cash and have too much debt so it was obvious that they were going to have to raise cash somehow since their run down casinos don’t bring in the poor and unfortunate like they used to.

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Also, Money McBags wanted to bring CTGX to your attention again as ~35% of their business is tied to staffing for IBM server installations and as we saw yesterday, IBM’s service contracts were up like a priapism sufferer when standing next to Bree Olson. In the past year Money McBags has broken CTGX down exhaustively on the award winning When Genius Prevailed (just throw them in to the search box, while Money McBags throws himself in to searching for Katie Savoy‘s box) and we’ve made well over 50% on the name but the stock still remains relatively cheap if they can continue adding EMR projects at the pace they have been (they had 6 new RFPs last Q) and especially if they continue to see a pick-up in their boring and shitty staffing business which Money McBags has completely discounted.

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Guidance is for ~$.50 in eps this year and with new EMR additions, Money McBags thinks $.75 eps is possible for next year if everything else stays as flat as Jennifer Connelly‘s acting. That said, their staffing business has had a huge bounce back growing ~27% and if the pick-up IBM saw this Q can trickle down to the shit CTGX does for them, then the company could easily beat the $.75 eps guess. CTGX is currently trading ~15x that but IBM’s Q is intriguing enough that they could put up a surprising quarter and Money McBags thinks you can buy in ahead of that Q.

No trackbacks yet.

The market rallied a bit in the afternoon as rising new claims for unemployment missed analyst guesses by somewhere near a fuckton (give or take an asshair or ten), Portugal and Greece saw bond yields rocket up more than applications to LaSalle’s MBA program and even more than Kate Upton on the awesomeness scale, and

The big news in the market on Friday was the release of the (No) Labor Department’s NFP Jobs Report (more commonly known as the Labor Force Participation Rate Report, or fiction) which showed the ponzeconomy™ added 216k jobs in March which was enough for the administration to pat themselves on their well insured backs and head

While there may have been a tsunami in Japan (and Money McBags heard rumors that it was caused by everything from Godzilla and Mothra learning that they had invested their savings with Bernie Madoff to a rush to the Apple stores to buy the new Hello Kitty themed iPad2), there was a spoogenami in the

Money McBags was out all day wearing his monkey suit to dance for the organ grinder so did he miss anything? — Holy fucking shit did the market get tossed like Gracie Glam in Whatabooty 8 thanks to new claims for unemployment claiming a lot more people are unemfuckingployed, China’s export growth slowing as Cream

Once again investors came out in full force to buy the fucking dip on Friday after learning that Qaddafi’s men opened fire on protesters in Tripoli in Moammar’s shoot first, shoot later negotiations policy, GDP was revised down to “QE3 is coming,” gold rose to over $1,400 an ounce once again making Flavor Flav’s teeth

With the market falling faster than the marginal peace in the Middle East as Qadaffi takes hold of Tripoli (and screw Tripoli, Money McBags would settle for taking hold of double E), faster than the SEC’s already piss awful reputation (as apparently their top lawyer made off with some Madoff profits), and even faster than

Stocks ended higher for the third consecutive week as protests throughout the Middle East continue to spread like misinformation during a political campaign or herpes in the Kardashian household. Yemen had its 8th day of protests (and for those of you unfamiliar with Yemen, it has a 65% unemployment rate, a 59% literacy rate, and

Money McBags only has time for a short update tonight, and for that he apologizes, but unfortunately some life shit got in his way today and thus he didn’t have time for a full column. If he did, he would have written about more unrest and uprisings in the Middle East than in the Octomom’s

The market was down today as retail sales disappointed (thanks to the weather, a little something called rampant unemployment, and everyone hoarding cash for the next generation of the fleshlight to be released), food prices continued to increase and spook investors as rising costs pushed 44MM more people in to poverty (though at least 13%